Edit 1: suggested allocation reduced from $300K to $100K
Mod asked for this discussion to be re-initiated in the General Forum or Discord (vs. Proposal Forum).
Suggested Treasury Allocation Proposal (TAP)
Caveat: The below proposal and any resulting snapshot vote would include language such that any allocation as proposed would be contingent upon a favorable review of security risks associated with bridging (see details below), to be conducted by the Policy Team.
Summary: Following OIP-20, the policy team is empowered to begin piloting deposits into new partners. In addition to the suggestion from the policy team for a pilot deposit to Gro Protocol (see TAP-3), this humble Ohmie suggests an allocation of $300K FRAX to Orion Saver.
Motivation: Orion Saver is low-risk savings product. Designed to offer safer access to DeFi yields, tokenised as a stablecoin. The allocation proposed would be denominated and redeemable in FRAX, and would earn yield denominated in FRAX at a fixed rate of 13.50%.
The Orion Saver dApp offers access to stablised yield via Anchor Protocol (built on Terra) for several ERC-20 stablecoins, including; wUST, DAI, USDT, USDC, BUSD and FRAX. Upon deposit of any of these stablecoins to the relevant Orion Money smart contract, an underlying position is ultimately established in native UST on Anchor Protocol. This cross-chain arrangement has both risks and benefits.
Benefits: It provides the highest single-sided FRAX-denominated yields in DeFi (currently 13.50% and expected to increase in the near future via Orion token incentives). It also translates some FRAX stablecoin risk to UST, which helps to protect the Olympus Treasury if one of DAI or USDC fails or gets censored (noting that two of three stablecoins in the Olympus Treasury are sensitive to counter-party risk from USDC's centralised issuer, Circle). Furthermore, Deposit Protection on Orion Money is also available via two forms of insurance; smart-contract failure insurance (via Insurace) and UST peg insurance (via Insurace or Unslashed). If desired, this will allow FRAX to generate yield even more safely.
Risks: Orion Money is a younger protocol following a two-stage launch (Private Farming and IDO). Stablecoin TVL is ~$77M (excludes Orion tokens). The project has been audited three times and is advised by Delphi Labs. Due to the swap-and-bridge of FRAX into an underlying UST position, this proposal carries additional composability risks relative to other yield aggregators that operate solely on Ethereum. Currently, redemptions may take up to 30 minutes to process, since each redemption must undergo a reverse bridge-and-swap process back to FRAX. In future, to speed up withdrawal operations the Orion team aims to build both Ethereum and Terra side liquidity pools, which will allow withdrawal of funds almost instantly. Given the modest liquidity requirements for long-term Treasury assets I do not see this as a material risk.
Our FRAX would remain denominated and redeemable as FRAX in this engagement.
Orion Money Project Overview: https://polkastarter.com/projects/orion-money#highlights
Security Audits: https://orion.money/security-and-audits
Current TVL: https://app.orion.money/dashboard
Recent Interview & Mechanics Summary with Project Founders: https://www.youtube.com/watch?v=QlTzWqFea48